TVS Motor Q2 Review: Record Market Share, 47% EBITDA Growth Spur Target Hikes; Why Citi Still Says ‘Sell’

TVS Motor’s September-quarter (Q2FY27) performance has strengthened the bullish case for the two- and three-wheeler maker, with brokerages raising target prices after a 47% year-on-year (YoY) jump in EBITDA and a record sales quarter. Goldman Sachs, Jefferies, Macquarie, Kotak Neo and Emkay remain positive on the stock, citing market-share gains, improving margins and growth across electric vehicles and exports.

Citi, however, has retained its ‘Sell’ rating despite raising its target price, arguing that elevated valuations remain a concern. The divide comes after TVS Motor reported a 52% rise in standalone net profit to Rs 1,377 crore, while revenue surged 44% to Rs 17,103 crore in Q2 FY27.

TVS Motor Q2 Results: Record Sales, Stronger Margins

TVS Motor’s operating performance was supported by a broad-based increase in volumes. Total two- and three-wheeler sales rose 27% year-on-year to around 1.9 million units, while EBITDA increased to Rs 2,219 crore from Rs 1,507 crore in the year-ago quarter.

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Operating EBITDA margin expanded to 13% from 12.7% a year earlier, despite pressure from rising commodity costs.

READ | TVS Motor Q2 Results: Net Profit Jumps 52%; Revenue, Margin Beats Estimates

Motorcycle sales grew 28% to 858,000 units, while scooter sales rose 29% to 825,000 units. Moped sales increased 12% to 157,000 units, and three-wheeler volumes climbed 47% to 78,475 units.

Overseas two- and three-wheeler sales rose 35% to around 500,000 units. Electric two-wheeler sales more than doubled, jumping 133% to 186,186 units from 80,009 units a year earlier.

For the first half of FY27, revenue increased 41% to Rs 30,999 crore, while standalone profit after tax rose 52% to Rs 2,551 crore. Operating EBITDA margin improved to 12.9% from 12.6%.

TVS Motor Q2: What Six Brokerages Say

The post-results assessments show broad optimism about TVS Motor’s growth prospects, although the brokerages differ on valuation and the extent of further upside.

Goldman Sachs Sees Market-Share Gains And Margin Improvement

Goldman Sachs has maintained its Buy rating and raised its target price to Rs 5,290 from Rs 4,950. The brokerage expects market-share gains and further margin improvement in the second half of FY27. It also sees the demerger of TVS Motor’s consumer finance business as an opportunity to unlock shareholder value.

Jefferies Flags A 23-Year High In Domestic Two-Wheeler Market Share

Jefferies has retained its Buy rating with a target price of Rs 5,425. It highlighted the 27% increase in volumes, stronger profitability and continued export momentum.

The brokerage also noted that TVS Motor’s domestic two-wheeler market share reached a 23-year high of 20%, reinforcing its assessment of the company’s competitive position.

Emkay Raises Target To Rs 5,600, But Flags A Changing Growth Environment

Emkay has retained its Buy rating and increased its target price by around 6% to Rs 5,600. It raised its FY27, FY28 and FY29 earnings-per-share estimates by approximately 11%, 8% and 7%, respectively, largely to account for stronger average selling prices.

However, Emkay also lowered its target valuation multiple to 33 times from 35 times, citing the fading boost from post-GST-cut growth and rising macroeconomic risks, including fuel prices and interest rates.

The brokerage expects healthy two-wheeler demand and good single-digit growth in the internal combustion engine segment in the second half of FY27. It also expects strong electric vehicle growth to continue.

Macquarie And Kotak Neo See Further Growth Drivers

Macquarie has maintained its Outperform rating with a target price of Rs 4,325. It highlighted the 47% increase in EBITDA, margin expansion to 13%, the consumer finance demerger and capacity expansion as key considerations.

Kotak Neo has retained its Add rating and raised its target price to Rs 4,400 from Rs 4,350. It expects TVS Motor to continue gaining market share across scooters, premium motorcycles and electric vehicles.

Citi Sticks To ‘Sell’ Despite Raising Its Target

Citi has raised its target price to Rs 3,600 from Rs 3,500 but maintained its Sell rating. The brokerage acknowledged that higher realisations and production-linked incentive (PLI) benefits helped offset rising operating costs, while also recognising the potential value-unlocking opportunity from the consumer finance demerger.

Its continued Sell stance highlights the valuation concern that separates it from the more bullish brokerages.

What Could Drive TVS Motor’s Next Leg Of Growth?

The brokerages’ positive outlook rests on several factors, which include continued market-share gains, premiumisation, export growth, electric vehicle adoption and the ability to protect margins against commodity-cost pressures.

Management expects healthy two-wheeler demand in the second half of FY27, with good single-digit growth in the internal combustion engine segment and sustained momentum in electric vehicles. It also expects no material increase in raw-material costs in the third quarter, with the possibility of some softening in the fourth quarter, according to Emkay’s assessment.

The consumer finance demerger is another potential catalyst, with Goldman Sachs, Macquarie and Citi all flagging the possibility of shareholder value unlocking.

For investors, the key distinction is between TVS Motor’s operating momentum and the valuation at which the stock trades. Five brokerages maintain positive ratings, while Citi’s Sell call shows that strong quarterly growth has not eliminated concerns over how much of the company’s future performance is already reflected in its valuation.

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